SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
| X |
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 1999
or
| |
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______________ to _________________
Commission file number 000-20557
THE ANDERSONS, INC.
(Exact name of registrant as specified in its charter)
| |
|
|
OHIO
(State or other jurisdiction of
incorporation or organization)
|
|
34-1562374
(I.R.S. Employer
Identification No.)
|
| |
|
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|
480 W. Dussel Drive, Maumee, Ohio
(Address of principal executive offices) |
|
43537
(Zip Code) |
Registrant’s telephone number, including area code (419) 893-5050
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Shares
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of the registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the registrant’s voting stock which may be
voted by persons other than affiliates of the registrant was $47,047,796 on
February 29, 2000, computed by reference to the last sales price for such stock
on that date as reported on the Nasdaq National Market.
The registrant had 7,655,269 Common shares outstanding, no par value, at
February 29, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1999 Annual Report of The Andersons, Inc. and Proxy
Statement for the Annual Meeting of Shareholders to be held on April 20, 2000,
are incorporated by reference into Parts II (Items 5, 6, 7 and 8), III (Items
10, 11 and 12) and IV of this Annual Report on Form 10-K. The Proxy Statement
will be filed with the Commission on or about March 10, 2000.
TABLE OF CONTENTS
PART I
Item 1. Business
(a) General Development of Business
The Andersons, Inc. is a diversified company with four operating groups.
The Agriculture Group merchandises grain, operates grain elevator facilities
located in Ohio, Michigan, Indiana and Illinois, manufactures agricultural
fertilizer, and distributes agricultural inputs (fertilizer, chemicals, seed
and supplies) to dealers and farmers. The Processing Group manufactures lawn
fertilizer and corncob based products for use primarily in the lawn and garden
and pet industries. The Manufacturing Group purchases, sells, repairs and
leases railcars and other rail equipment. The Retail Group operates six retail
stores and a distribution center in Ohio.
(b) Financial Information About Industry Segments
See Note 13 to the consolidated financial statements for information
regarding business segments.
(c) Narrative Description of Business
Agriculture Group
The Agriculture Group operates grain elevators, wholesale fertilizer
terminals, and farm centers.
The Company’s grain operations involve merchandising grain and operating
terminal grain elevator facilities. This includes purchasing, handling,
processing and conditioning grain, storing grain purchased by the Company as
well as grain owned by others, and selling grain. The principal grains sold by
the Company are yellow corn, yellow soybeans and soft red and white wheat. The
Company’s total grain storage capacity was approximately 80 million bushels at
December 31, 1999.
Grain merchandised by the Company is grown in the midwestern portion of
the United States (the Eastern Corn Belt) and is acquired from country
elevators, dealers and producers. The Company makes grain purchases at prices
referenced to Chicago Board of Trade quotations. The Company competes for the
purchase of grain with grain processors and feeders, as well as with other
grain merchandisers.
In 1998, the Company signed a five-year lease agreement with Cargill, Inc.
for Cargill’s Maumee and Toledo, Ohio grain handling and storage facilities.
As part of the agreement, Cargill was given the marketing rights to grain in
the Cargill-owned facilities as well as the adjacent Company-owned facilities
in Maumee and Toledo. These agreements cover 45%, or 35 million bushels, of
the Company’s total storage space and became effective on June 1, 1998.
2
During 1999, approximately 69% of the grain sold by the Company was
purchased domestically by grain processors and feeders, and approximately 31%
was exported. Most of the exported grain was purchased by exporters for
shipment to foreign markets. Some grain is shipped directly to foreign
countries, mainly Canada. Almost all grain shipments are by rail or boat.
Rail shipments are made primarily to grain processors and feeders, with some
rail shipments made to exporters on the Gulf or East Coast. All boat shipments
are from the Port of Toledo. Grain sales, except for grain sales subject to
the marketing agreement with Cargill which are effected on a negotiated basis
with Cargill’s merchandising staff, are effected on a negotiated basis by the
Company’s merchandising staff.
The Company’s grain business may be adversely affected by the grain supply
(both crop quality and quantity) in its principal growing area, government
regulations and policies, conditions in the shipping and rail industries and
commodity price levels. See “Government Regulation”. The grain business is
seasonal coinciding with the harvest of the principal grains purchased and sold
by the Company.
Fixed price purchases and sales of cash grain and grain held in inventory
expose the Company to risks related to adverse changes in price. The Company
attempts to manage these risks by hedging fixed price purchase and sale
transactions and inventory through the use of futures and option contracts with
the Chicago Board of Trade (“CBOT”). The CBOT is a regulated commodity futures
exchange that maintains futures markets for the grains merchandised by the
Company. Futures prices are determined by worldwide supply and demand.
The Company’s hedging program is designed to reduce the risk of changing
commodity prices. In that regard, hedging transactions also limit potential
gains from further changes in market prices. The grain division’s
profitability is primarily derived from margins on grain sold, and revenues
generated from other merchandising activities with its customers, not from
hedging transactions. The Company has a policy which specifies the key
controls over its hedging program. This policy includes a description of the
hedging programs, mandatory review of positions by key management outside of
the trading function on a biweekly basis, daily position limits, modeling of
positions for changes in market conditions, and other internal controls.
Purchases of grain can be made the day the grain is delivered to a
terminal or via a forward contract made prior to actual delivery. Sales of
grain generally are made by contract for delivery in a future period. When the
Company purchases grain at a fixed price, the purchase is hedged with the sale
of a futures contract on the CBOT. Similarly, when the Company sells grain at
a fixed price, the sale is hedged with the purchase of a futures contract on
the CBOT. At the close of business each day the open inventory ownership
positions as well as open futures and option positions are
marked-to-the-market. Gains/losses in the value of the Company’s owned
inventory positions due to changing market prices are netted with and generally
offset by losses/gains in the value of the Company’s futures positions.
When a futures contract is entered into, an initial margin deposit must be
sent to the CBOT. The amount of the margin deposit is set by the CBOT and
varies by commodity. If the
market price of a futures contract moves in a direction which is adverse to the
Company’s
3
position, an additional margin deposit, called a maintenance margin,
is required by the CBOT. Subsequent price changes could require additional
maintenance margins or could result in the return of maintenance margins by the
CBOT. Significant increases in market prices, such as occur when weather
conditions are unfavorable for extended periods, can have an effect on the
Company’s liquidity and require it to maintain appropriate short-term lines of
credit. The Company may utilize CBOT option contracts to limit its exposure to
potential required margin deposits in the event of a rapidly rising market.
The Grain operation relies on forward purchase contracts with producers,
dealers and country elevators to ensure an adequate supply of grain to its
facilities throughout the year. Bushels contracted for future delivery at
February 29, 2000 approximated 49 million, 95% of which are to be delivered to
the Company in the 1999 and 2000 crop years (through August 2001). The Company
relies heavily on its hedging program as the method for minimizing price risk
in its grain inventories and contracts. The Company monitors current market
conditions and may expand or reduce the purchasing program in response to
changes in those conditions. In addition, the Company reviews its purchase
contracts and the parties to those contracts on a regular basis for credit
worthiness, defaults and non-delivery.
The Company competes in the sale of grain with other grain merchants,
other elevator operators and farmer cooperatives that operate elevator
facilities. Competition is based primarily on price, service and reliability.
Some of the Company’s competitors are also its customers and many of its
competitors have substantially greater financial resources than the Company.
The Company’s wholesale fertilizer operations involve purchasing, storing,
formulating, and selling dry and liquid fertilizers; providing fertilizer
warehousing and services to manufacturers and customers; and the wholesale
distribution of seeds and various farm supplies. The major fertilizer
ingredients sold by the Company are nitrogen, phosphate and potassium, all of
which are readily available from various sources.
The Company’s wholesale fertilizer market area primarily includes
Illinois, Indiana, Michigan and Ohio and customers for the Company’s fertilizer
products are principally retail dealers. Sales of agricultural fertilizer
products are heaviest in the spring and fall.
The Company’s aggregate owned wholesale storage capacity for dry
fertilizer was 12.9 million cubic feet at December 31, 1999. The Company
reserves 5.9 million cubic feet of this space for various fertilizer
manufacturers and customers. The Company’s aggregate wholesale storage
capacity for liquid fertilizer at December 31, 1999 was 29.7 million gallons
and 8.4 million gallons of this space is reserved for manufacturers and
customers. The agreements for reserved space provide the Company storage and
handling fees and, generally, are for an initial term of one year and are
renewable at the end of each term. The Company also leases .3 million cubic
feet and 4.4 million gallons of dry and liquid fertilizer capacity,
respectively, under arrangements with various fertilizer dealers and
warehouses.
The Company operates fourteen farm centers located throughout Michigan,
Indiana and Ohio. These centers, located within the same regions as the
Company’s grain and wholesale
4
fertilizer facilities, offer agricultural
fertilizer, custom application of fertilizer to farms and golf courses, and
chemicals, seeds and supplies to the farmer.
In its agricultural fertilizer businesses, the Company competes with
regional cooperatives; fertilizer manufacturers; multi-state retail/wholesale
chain store organizations; and other independent wholesalers of agricultural
products. Many of these competitors have considerably larger resources than
the Company. Competition in the agricultural products business of the Company
is based principally on price, location and service.
Processing Group
The Processing Group produces and markets granular lawn fertilizer and
related products to retailers and professional lawn care companies. It also
produces and distributes corncob-based products to the chemical carrier, pet
and industrial markets. Retail lawn products are sold to mass merchandisers,
small independent retailers and other lawn fertilizer manufacturers. During
the off-season, ice melt products are distributed to many of the same
retailers. Professional lawn products are sold both direct and through
distributors to lawn service applicators and to golf courses. Principal raw
materials for the lawn care products are nitrogen, potash and phosphate, which
are purchased primarily from the Company’s wholesale fertilizer division. The
lawn products industry is highly seasonal, with the majority of sales occurring
from early spring to early summer. Competition is based principally on
merchandising ability, service and quality.
The Company is one of the largest producers of processed corncob products
in the United States. These products serve the chemical and feed ingredient
carrier, animal litter and industrial markets and are distributed throughout
the United States and Canada and into Europe and Asia. The principal sources
for the corncobs are the Company’s grain operations and seed corn producers.
The Company has signed a letter of intent with The Scott’s Company, Inc.
to acquire their U.S. professional turf business. The transaction is expected
to close by May 31, 2000.
Manufacturing Group
The Company’s Manufacturing Group buys, sells, leases, rebuilds and
repairs various types of used railcars and rail equipment. The division also
provides fleet management services to fleet owners and operates a custom steel
fabrication business. A significant portion of the railcar fleet is leased
from financial lessors and sub-leased to end-users. Some of these leases are
nonrecourse to the Company. Competition for railcar marketing and fleet
maintenance services is based primarily on service, access to used rail
equipment and access to third party financing. Repair and fabrication shop
competition is based primarily on price, quality and location.
The Company completed its first lease transaction involving locomotives in
December 1999. The Company plans to continue to diversify its fleet both as to
car type and by primary industry.
Retail Group
5
The Company’s Retail Group consists of six stores operated as “The
Andersons”, which are located in the Columbus, Lima and Toledo, Ohio markets
and serve urban, suburban and rural customers. The retail concept is “More for
Your Home” and includes a full line of home center products plus a wide array
of other items not available at the more traditional home center stores. In
addition to hardware, home remodeling and lawn & garden products, The Andersons
stores offer housewares, automotive products, sporting goods, pet products,
bath soft goods and food (bakery, deli, produce, wine and specialty groceries).
Each store carries more than 70,000 different items, has 100,000 square feet
or more of in-store display space plus 40,000 square feet of outdoor garden
center space, and has a center aisle that features do-it-yourself clinics,
special promotions and varying merchandise displays.
The retail merchandising business is highly competitive. The Company
competes with a variety of retail merchandisers, including home centers,
department and hardware stores. The principal competitive factors are
location, quality of product, price, service, reputation, and breadth of
selection. The Company’s retail business is affected by seasonal factors with
significant sales occurring during the Christmas season and in the spring.
Other Businesses
The Company announced in January 2000 that it intends to sell its interest
in The Andersons — Tireman Auto Centers to its current venture partner and the
current general manager. This transaction is expected to close in the first
quarter.
Research and Development
The Company’s research and development program is mainly concerned with
the development of improved products and processes, primarily for the
Processing Group. The Company expended approximately $380,000, $340,000, and
$350,000 on research and development during 1999, 1998 and 1997, respectively.
Employees
At December 31, 1999, the Company had 1,276 full-time and 1,777 part-time
or seasonal employees. The Company believes its relations with its employees
are good.
Government Regulation
Grain sold by the Company must conform to official grade standards imposed
under a federal system of grain grading and inspection administered by the
United States Department of Agriculture (“USDA”).
The production levels, markets and prices of the grains that the Company
merchandises are materially affected by United States government programs,
including acreage control and price support programs of the USDA. Also, under
federal law, the President may prohibit the export of any product, the scarcity
of which is deemed detrimental to the domestic economy, or
6
under circumstances
relating to national security. Because a portion of the Company’s grain sales
is to exporters, the imposition of such restrictions could have an adverse
effect upon the Company’s operations.
The Company, like other companies engaged in similar businesses, is
subject to a multitude of federal, state and local environmental protection
laws and regulations including, but not limited to, laws and regulations
relating to air quality, water quality, pesticides and hazardous materials.
The provisions of these various regulations could require modifications of
certain of the Company’s existing plant and processing facilities and could
restrict future facilities expansion or significantly increase their cost of
operation. Of the Company’s capital expenditures, approximately $810,000,
$650,000 and $945,000 in 1999, 1998 and 1997, respectively, were made in order
to comply with these regulations.
7
Item 2. Properties
The Company’s principal agriculture, retail and other properties are
described below. Except as otherwise indicated, the Company owns all
properties.
Agriculture Facilities
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| (in thousands) |
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Agricultural Fertilizer |
|
|
Grain Storage |
|
Dry Storage |
|
Liquid Storage |
| Location |
|
(bushels) |
|
(cubic feet) |
|
(gallons) |
|
|
|
|
|
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|
| Maumee, OH (3) |
|
|
21,570 |
|
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|
4,500 |
|
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2,878 |
|
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| Toledo, OH Port (4) |
|
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13,450 |
|
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|
1,800 |
|
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2,812 |
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| Metamora, OH |
|
|
6,860 |
|
|
|
— |
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|
— |
|
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| Lyons, OH (2) |
|
|
380 |
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53 |
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194 |
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| Toledo, OH (1) |
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1,000 |
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|
— |
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— |
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| Fremont, OH (2) |
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— |
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47 |
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284 |
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| Fostoria, OH (2) |
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|
— |
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36 |
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279 |
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| Gibsonburg, OH (2) |
|
|
— |
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35 |
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307 |
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| Pulaski, OH (1) (2) |
|
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— |
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33 |
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250 |
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| Lordstown, OH |
|
|
— |
|
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|
197 |
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— |
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| Champaign, IL |
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13,500 |
|
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|
833 |
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— |
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| Delphi, IN |
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6,700 |
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|
923 |
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— |
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| Clymers, IN (2) |
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4,400 |
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37 |
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2,636 |
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| Dunkirk, IN |
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5,980 |
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|
833 |
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— |
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| Poneto, IN |
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|
600 |
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10 |
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6,298 |
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| North Manchester, IN (2) |
|
|
— |
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23 |
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127 |
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| Seymour, IN |
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— |
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720 |
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943 |
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| Waterloo, IN (1) (2) |
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— |
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992 |
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1,654 |
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| Logansport, IN |
|
|
— |
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33 |
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3,292 |
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| Walton, IN (2) |
|
|
— |
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375 |
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5,962 |
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| Albion, MI (2) |
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2,500 |
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22 |
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163 |
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| White Pigeon, MI |
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2,450 |
|
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|
— |
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— |
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| Webberville, MI |
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|
— |
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1,747 |
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3,916 |
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| Litchfield, MI (2) |
|
|
— |
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|
40 |
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252 |
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| North Adams, MI (2) |
|
|
— |
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27 |
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317 |
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| Union City, MI (2) |
|
|
— |
|
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|
60 |
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430 |
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| Munson, MI (2) |
|
|
— |
|
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33 |
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160 |
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79,390 |
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13,409 |
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33,154 |
|
| (1) |
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Facility leased. |
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| (2) |
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Facility is or includes a farm center. |
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| (3) |
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Includes leased facilities with a 4,300-bushel capacity. |
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| (4) |
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Includes leased facilities with a 7,500-bushel capacity. |
8
The grain facilities are mostly concrete and steel tanks, with some flat
storage, which is primarily cover-on-first temporary storage. The Company also
owns grain inspection buildings and dryers, a corn sheller plant, maintenance
buildings and truck scales and dumps.
Wholesale fertilizer and farm center properties consist mainly of
fertilizer warehouse and distribution facilities for dry and liquid
fertilizers. The Maumee, Ohio; Seymour, Indiana; and Walton, Indiana locations
have fertilizer mixing, bagging and bag storage facilities. Aggregate storage
capacity in the fourteen farm centers located in Michigan, Indiana and Ohio for
liquid fertilizer and dry fertilizer is 3.5 million gallons and 521,150 cubic
feet, respectively.
Retail Store Properties
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| Name |
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Location |
|
Square Feet |
|
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|
| Maumee Store |
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Maumee, OH |
|
|
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131,000 |
|
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| Toledo Store |
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Toledo, OH |
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130,000 |
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| Woodville Store (1) |
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Northwood, OH |
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100,000 |
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| Lima Store (1) |
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Lima, OH |
|
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117,000 |
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| Brice Store |
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Columbus, OH |
|
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128,000 |
|
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| Sawmill Store |
|
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Columbus, OH |
|
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134,000 |
|
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| Warehouse (1) |
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Maumee, OH |
|
|
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245,000 |
|
(1) Leased
The leases for the two stores and the warehouse facility are long-term
leases with several renewal options and provide for minimum aggregate annual
lease payments approximating $1 million. The two store leases provide for
contingent leases payments based on achieved sales volume. Neither store
achieved a sales level triggering contingent lease payments in 1999, 1998 or
1997.
Other Properties
The Company owns lawn fertilizer production facilities and automated pet
food production and storage facilities in Maumee, Ohio, a lawn fertilizer
production facility in Bowling Green, Ohio and a lawn fertilizer production
facility in Montgomery, Alabama. It also owns corncob processing and storage
facilities in Maumee, Ohio and Delphi, Indiana. The Company leases lawn
fertilizer warehouse facilities in Toledo, Ohio. The Company also participates
in a venture that leases lawn fertilizer production and warehouse facilities in
Pottstown, Pennsylvania.
In its railcar business, the Company owns, leases or controls
approximately 30 locomotives and 4,300 railcars (primarily covered or open
hoppers with some boxcars, tank cars and gondolas) with lease terms ranging
from one to twelve years and future minimum lease payments aggregating $41
million with future minimum sublease income of approximately $39 million. The
Company also owns a railcar repair facility, a steel fabrication facility, and
owns or leases a number of switch engines, cranes and other equipment.
9
The Company owns a service and sales facility for outdoor power equipment
and several auto service centers leased to its venture. That venture also
leases other auto service centers and a warehouse directly from third parties.
The Company expects to continue as landlord on its auto service centers.
The Company’s administrative office building is leased under a net lease
expiring in 2005. The Company owns approximately 994 acres of land on which
various of the above properties and facilities are located; approximately 383
acres of farmland and land held for future use; approximately 4 acres of
improved land in an office/industrial park held for sale; and certain other
real estate.
Real properties, machinery and equipment of the Company were subject to
aggregate encumbrances of approximately $33 million at December 31, 1999.
Additions to property, including intangible assets, for the years ended
December 31, 1999, 1998 and 1997 amounted to $22 million, $16 million and $16
million, respectively. See Note 10 to the Company’s consolidated financial
statements for information as to the Company’s leases.
The Company believes that its properties, including its machinery,
equipment and vehicles, are adequate for its business, well maintained and
utilized, suitable for their intended uses and adequately insured.
Item 3. Legal Proceedings
The Company is not involved in any legal proceedings that it believes to
be material.
Item 4. Submission of Matters to a Vote of Security Holders
None
10
Item 4a. Executive Officers of the Registrant
Pursuant to General Instruction G(3) of Form 10-K, the following
information with respect to the executive officers of the registrant is
included herein in lieu of being included in the Registrant’s Proxy Statement
for its Annual Meeting of Shareholders to be held April 20, 2000.
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Year |
| Name |
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Position |
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Age |
|
Assumed |
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| Dennis J. Addis |
|
Vice President and General Manager, Wholesale Fertilizer Division, Agriculture Group
|
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47
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1999 |
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| Christopher J. Anderson |
|
Executive Vice President, Strategy and Business Development
|
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45
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1999 |
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President, Processing and Manufacturing Group
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1996 |
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| Daniel T. Anderson |
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President, Retail Group
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|
|
44
|
|
|
|
1996 |
|
|
|
|
|
|
|
|
Director of Marketing and Merchandising, Retail Group
|
|
|
|
|
|
|
1996 |
|
|
|
|
|
|
| Michael J. Anderson |
|
President and Chief Executive Officer
|
|
|
48
|
|
|
|
1999 |
|
|
|
|
|
|
|
|
President and Chief Operating Officer
|
|
|
|
|
|
|
1996 |
|
|
|
|
|
|
| Richard M. Anderson |
|
President, Processing Group
|
|
|
45
|
|
|
|
1999 |
|
|
|
|
|
|
| Richard P. Anderson |
|
Chairman of the Board
|
|
|
70
|
|
|
|
1999 |
|
|
|
|
|
|
|
|
Chairman of the Board and Chief Executive Officer
|
|
|
|
|
|
|
1996 |
|
|
|
|
|
|
| Joseph C. Christen |
|
Vice President, Human Resource Development
|
|
|
51
|
|
|
|
1996 |
|
|
|
|
|
|
| Dale W. Fallat |
|
Vice President — Corporate Services
|
|
|
55
|
|
|
|
1992 |
|
|
|
|
|
|
| Philip C. Fox |
|
Vice President, Corporate Planning
|
|
|
57
|
|
|
|
1996 |
|
|
|
|
|
|
| Charles E. Gallagher |
|
Vice President, Personnel
|
|
|
58
|
|
|
|
1996 |
|
|
|
|
|
|
| Richard R. George |
|
Vice President and Controller
|
|
|
50
|
|
|
|
1996 |
|
|
|
|
|
|
| Beverly J. McBride |
|
Vice President, General Counsel and Secretary
|
|
|
58
|
|
|
|
1996 |
|
|
|
|
|
|
| Harold M. Reed |
|
Vice President and General Manager, Grain Division, Agriculture Group
|
|
|
43
|
|
|
|
1999 |
|
|
|
|
|
|
| Martin R. Rossol |
|
Vice President and General Manager, Farm Center Division, Agriculture Group
|
|
|
45
|
|
|
|
1999 |
|
|
|
|
|
|
| Rasesh H. Shah |
|
President, Manufacturing Group
|
|
|
45
|
|
|
|
1999 |
|
|
|
|
|
|
| Gary L. Smith |
|
Vice President, Finance and Treasurer
|
|
|
54
|
|
|
|
1996 |
|
11
PART II
Item 5. Market for the Registrant’s Common Equity and Related Stockholder Matters
The information under the caption Quarterly Financial Data and Market for
Common Stock on page 12 and Shareholders on the inside back cover of The
Andersons, Inc. 1999 Annual Report to Shareholders is incorporated herein by
reference. The Company paid quarterly dividends of five cents and four cents
per common share, respectively, in 1999 and 1998. The Company declared
quarterly dividends of six cents per common share to be paid January 21, 2000
and April 21, 2000 to shareholders of record on January 3, 2000 and April 1,
2000.
Item 6. Selected Financial Data
The information under the caption Selected Financial Data on page 12 of
The Andersons, Inc. 1999 Annual Report to Shareholders is incorporated herein
by reference.
Item 7. Management’s Discussion & Analysis of Financial Condition and Results of Operations
The information under the caption Management’s Discussion & Analysis
appearing on pages 18 through 20 of The Andersons, Inc. 1999 Annual Report to
Shareholders is incorporated herein by reference.
Item 7a. Quantitative and Qualitative Disclosures about Market Risk
The information under the captions Market Risk Sensitive Instruments and
Positions, Commodities and Interest appearing on page 20 and 21 of The
Andersons, Inc. 1999 Annual Report to Shareholders is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data
The information under the caption Quarterly Financial Data and Market for
Common Stock on page 12 of The Andersons, Inc. 1999 Annual Report to
Shareholders, as well as the following consolidated financial statements of The
Andersons, Inc. set forth on pages 13 through 17 and 22 through 32 of The
Andersons, Inc. 1999 Annual Report to Shareholders are incorporated herein by
reference:
| • |
|
Consolidated Statements of Income for the years ended December 31,
1999, 1998 and 1997 |
| |
| • |
|
Consolidated Balance Sheets as of December 31, 1999 and 1998 |
| |
| • |
|
Consolidated Statements of Cash Flows for the years ended December 31,
1999, 1998 and 1997 |
12
| • |
|
Consolidated Statements of Shareholders’ Equity for the years ended
December 31, 1999, 1998 and 1997 |
| |
| • |
|
Notes to Consolidated Financial Statements |
Following is the Report of Independent Auditors on the Consolidated
Financial Statements and schedule:
Report of Independent Auditors
Board of Directors
The Andersons, Inc.
We have audited the accompanying consolidated balance sheets of The Andersons,
Inc. and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of income, shareholders’ equity and cash flows for each
of the three years in the period ended December 31, 1999. Our audits also
included the financial statement schedule listed in the index at Item 14(a).
These financial statements and schedule are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of The
Andersons, Inc. and subsidiaries at December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
Toledo, Ohio
January 24, 2000
13
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
On February 25, 2000, The Andersons, Inc. determined that the firm of
Ernst & Young LLP (E&Y) would no longer serve as the Company’s independent
accounting firm, effective with the filing of this document.
During the years ended December 31, 1999 and 1998 and the subsequent
interim period, there were no disagreements between the Company and E&Y on any
matters of accounting principles or practices, financial statement disclosure
or auditing scope or procedure, which, if not resolved to the satisfaction of
E&Y, would have been referred to in their reports. E&Y’s reports on the
Company’s financial statements for the years ended December 31, 1999 and 1998
did not contain an adverse opinion or a disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope, or accounting principles.
The decision to change independent accountants was approved by the Audit
Committee of the Company’s Board of Directors
The Company has engaged PricewaterhouseCoopers LLP as its new independent
accountants, also effective with the filing of this document.
PART III
Item 10. Directors and Executive Officers of the Registrant
For information with respect to the executive officers of the registrant,
see “Executive Officers of the Registrant” in Item 4a included in Part I of
this report. For information with respect to the Directors of the registrant,
see “Election of Directors” in the Proxy Statement for the Annual Meeting of
the Shareholders to be held on April 20, 2000 (the “Proxy Statement”), which is
incorporated herein by reference; for information concerning 1934 Securities
and Exchange Act Section 16(a) Compliance, see such section in the Proxy
Statement, incorporated herein by reference.
Item 11. Executive Compensation
The information set forth under the caption “Executive Compensation” in
the Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information set forth under the caption “Security Ownership” in the
Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
None
14
PART IV
Item 14. Financial Statement Schedules and Reports on Form 8-K
(a) (1) The consolidated financial statements of the Company, as set forth
under Item 8 of this report on Form 10-K, are incorporated herein by reference
from The Andersons, Inc. 1999 Annual Report to Shareholders.
(2) The following consolidated financial statement schedule is included in Item 14(d):
| |
|
|
|
|
|
|
|
|
|
|
Page |
|
|
|
|
|
| II. |
|
Consolidated Valuation and Qualifying Accounts — years
ended December 31, 1999, 1998 and 1997
|
|
|
18 |
|
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore have
been omitted.
(3) Exhibits:
| |
|
|
| 2.1 |
|
Agreement and Plan of Merger, dated April 28, 1995 and amended as
of September 26, 1995, by and between The Andersons Management Corp.
and The Andersons. (Incorporated by reference to Exhibit 2.1 to
Registration Statement No. 33-58963). |
|
|
|
|
|
| 3.1 |
|
Articles of Incorporation. (Incorporated by reference to Exhibit
3(d) to Registration Statement No. 33-16936). |
|
|
|
|
|
| 3.4 |
|
Code of Regulations of The Andersons, Inc. (Incorporated by
reference to Exhibit 3.4 to Registration Statement No. 33-58963). |
|
|
|
|
|
| 4.3 |
|
Specimen Common Share Certificate. (Incorporated by reference to
Exhibit 4.1 to Registration Statement No. 33-58963). |
|
|
|
|
|
| 4.4 |
|
The Seventeenth Supplemental Indenture dated as of August 14,
1997, between The Andersons, Inc. and The Fifth Third Bank, successor
Trustee to an Indenture between The Andersons and Ohio Citizens Bank,
dated as of October 1, 1985. (Incorporated by reference to Exhibit 4.4
to The Andersons, Inc. the 1998 Annual Report on Form 10-K) |
|
|
|
|
|
| 10.1 |
|
Management Performance Program. * (Incorporated by reference to
Exhibit 10(a) to the Predecessor Partnership’s Form 10-K dated
December 31, 1990, File No. 2-55070). |
|
|
|
|
|
| 10.2 |
|
The Andersons, Inc. Amended Long-Term Performance Compensation
Plan * (Incorporated by reference to Appendix A to the Proxy Statement
for the April 22, 1999 Annual Meeting). |
15
| |
|
|
|
|
|
|
|
| 10.3 |
|
The Andersons, Inc. Employee Share Purchase Plan * (Incorporated
by reference to Appendix C to Registration Statement No. 33-58963). |
|
|
|
|
|
| 13 |
|
The Andersons, Inc. 1999 Annual Report to Shareholders |
|
|
|
|
|
| 21 |
|
Subsidiaries of The Andersons, Inc. |
|
|
|
|
|
| 23.1 |
|
Consent of Independent Auditors |
| * |
|
Management contract or compensatory plan. |
The Company agrees to furnish to the Securities and Exchange Commission a
copy of any long-term debt instrument or loan agreement that it may request.
(b) Reports on Form 8-K:
|
|
| |
There were no reports on Form 8-K filed in the fourth quarter of 1999. |
(c) Exhibits:
|
|
| |
The exhibits listed in Item 14(a)(3) of this report, and not incorporated
by reference, follow “Financial Statement Schedule” referred to in (d)
below. |
(d) Financial Statement Schedule:
|
|
| |
The financial statement schedule listed in 14(a)(2) follows “Signatures”. |
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in Maumee, Ohio,
on the 10th day of March, 2000.
| |
THE ANDERSONS, INC.
(Registrant) |
| |
By /s/Michael J.
Anderson |
| |
|
| |
Michael J. Anderson
President and Chief Executive Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant on the 10th day of March, 2000.
| |
|
|
|
|
| Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/Michael J. Anderson
Michael J. Anderson |
|
President
Chief Executive Officer
(Principal Executive Officer)
|
|
3/10/00 |
| |
/s/Richard R. George
Richard R. George |
|
Vice President & Controller
(Principal Accounting Officer)
Vice President, Finance &
|
|
3/10/00 |
| |
/s/Gary L. Smith
Gary L. Smith |
|
Treasurer
(Principal Financial Officer)
|
|
3/10/00 |
| |
/s/Richard P. Anderson
Richard P. Anderson |
|
Chairman of the Board
Director
|
|
3/10/00 |
| |
/s/Donald E. Anderson
Donald E. Anderson |
|
Director
|
|
3/10/00 |
| |
/s/Richard M. Anderson
Richard M. Anderson |
|
Director
|
|
3/10/00 |
| |
/s/Thomas H. Anderson
Thomas H. Anderson |
|
Director
|
|
3/10/00 |
| |
/s/John F. Barrett
John F. Barrett |
|
Director
|
|
3/10/00 |
| |
/s/Paul M. Kraus
Paul M. Kraus |
|
Director
|
|
3/10/00 |
| |
/s/Donald L. Mennel
Donald L. Mennel |
|
Director
|
|
3/10/00 |
| |
/s/David L. Nichols
David L. Nichols |
|
Director
|
|
3/10/00 |
| |
/s/Sidney A. Ribeau
Dr. Sidney A. Ribeau |
|
Director
|
|
3/10/00 |
| |
/s/Charles A. Sullivan
Charles A. Sullivan |
|
Director
|
|
3/10/00 |
| |
/s/Jacqueline F. Woods
Jacqueline F. Woods |
|
Director
|
|
3/10/00 |
Except for those portions of The Andersons, Inc. 1999 Annual Report to
Shareholders specifically incorporated by reference in this report on Form
10-K, such annual report is furnished solely for the information of the
Securities and Exchange Commission and is not to be deemed “filed” as a part of
this filing.
17
SCHEDULE II — CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
THE ANDERSONS, INC.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions |
|
|
|
|
|
|
|
|
|
|
|
Balance at |
|
Charged to |
|
Charged to |
|
|
|
|
|
Balance |
|
|
|
Beginning |
|
Costs and |
|
Other Accounts |
|
Deductions |
|
at End |
| Description |
|
of Period |
|
Expenses |
|
- Describe |
|
- Describe |
|
of Period |
|
|
|
|
|
|
|
|
|
|
|
| Allowance for doubtful accounts receivable: |
|
|
|
|
|
|
Year ended December 31, 1999 |
|
$ |
4,455,000 |
|
|
$ |
826,543 |
|
|
$ |
— |
|
|
$ |
1,301,543 |
(1) |
|
$ |
3,980,000 |
|
|
|
|
|
|
|
Year ended December 31, 1998 |
|
|
2,957,000 |
|
|
|
2,913,962 |
|
|
|
235,500 |
(2) |
|
|
1,651,462 |
(1) |
|
|
4,455,000 |
|
|
|
|
|
|
|
Year ended December 31, 1997 |
|
|
3,230,000 |
|
|
|
1,680,523 |
|
|
|
— |
|
|
|
1,953,523 |
(1) |
|
|
2,957,000 |
|
|
|
|
|
|
| Allowance for doubtful notes receivable: |
|
|
|
|
|
|
Year ended December 31, 1999 |
|
$ |
515,000 |
|
|
$ |
353,508 |
|
|
$ |
— |
|
|
$ |
285,508 |
(1) |
|
$ |
583,000 |
|
|
|
|
|
|
|
Year ended December 31, 1998 |
|
|
777,000 |
|
|
|
530,923 |
|
|
|
— |
|
|
|
792,923 |
(1) |
|
|
515,000 |
|
|
|
|
|
|
|
Year ended December 31, 1997 |
|
|
735,000 |
|
|
|
86,409 |
|
|
|
— |
|
|
|
44,409 |
(1) |
|
|
777,000 |
|
| (1) |
|
Uncollectible accounts written off, net of recoveries |
|
|
|
|
|
| (2) |
|
Allowance for doubtful accounts acquired in acquisition of business |
18
EXHIBIT INDEX
THE ANDERSONS, INC.
| |
|
|
| Exhibit |
| Number |
|
| 13 |
|
The Andersons, Inc. 1999 Annual Report to Shareholders |
|
|
|
|
|
| 21 |
|
Subsidiaries of The Andersons, Inc. |
|
|
|
|
|
| 23.1 |
|
Consent of Independent Auditors |
19
